Service of a notice under section 17(b) of the Wealth Tax Act, 1957, on an agent of the assessee who is duly authorized to accept service is valid and proper service.

SABYASACHI MUKHARJI, J.

1. THE assessee is an HUF. This reference arises out of the reassessments made in respect of the wealth-tax asst. yrs. 1957-58, 1958-59, 1959-60 and 1960-61 for which the relevant valuation dates are 31st March, 1957, 31st March, 1958, 31st March, 1959 and 31st March, 1960, respectively. The assessments had been originally completed under s. 16(3) of the said Act on the basis of returns filed by the assessee. The WTO thereupon took proceedings under s. 17(b) of the WT Act on the ground that a part of the assessee's wealth had escaped assessment. Notices under s. 17(b) of the Act were served on one, T.P. Pal, on 15th Nov., 1960, for the asst. yrs. 1957-58, 1958-59 and 1959-60 and on 30th Nov., 1960, for the asst. yr. 1960-61. It appears that Shri T. P. Pal had signed order sheet stating that he had received notices for three assessment years on 30th Nov., 1960, and for the asst. yr. 1960-61. No point was taken at the assessment stage that notices were not validily served upon the assessee. The WTO completed reassessments for the asst. yrs. 1957-58, 1958-59 and 1959-60 on 31st Jan., 1961, and for 1960-61 on 30th Jan., 1961, bringing to assessment escaped assets valued at Rs. 3,84,535, Rs. 3,84,535, Rs. 3,47,042 and Rs. 3,37,668 respectively for the four years.

2. ON appeal before the AAC a ground was allowed to be taken that the notices under s. 17(b) had not been validly served on the assessee and consequently the reassessment were bad in law. It was contended that Shri T. P. Pal was not an accredited agent of the assessee and, therefore, the service of notices on him did not constitute proper service. The AAC rejected that contention and held that, as Sri T. P. Pal was an accountant of the assessee and was regularly attending to the wealth-tax matters of the assessee in all these years and that he had been given written authorisation by the assessee to represent the assessee in all wealth-tax matters, there was a valid service upon the assessee under s. 17(b) of the Act by serving notices on Sri T.P. Pal. The AAC, however, held that even on the footing that there was no proper service, the assessee having filed the returns without objection, had waived any irregularities in service and that the reassessments have to be upheld on that basis.

The assessee preferred a further appeal before the Tribunal and contended that Sri Pal had no authority to accept service of notices. The Tribunal held that Sri Pal was empowered only to represent the assessee in the wealth-tax matters and was not granted authority to accept service of any notices on behalf of the assessee. The Tribunal was of opinion that there has been no proper service on the assessee of the said notice under s. 17(b) of the Act. The Tribunal held that the service of a notice on the assessee is a condition precedent to the validity of a reassessment made under s. 17(b) of the Act; and as valid notices have not been served according to the Tribunal, the proceedings taken by the WTO in pursuance of invalid notices and consequent orders of reassessments passed thereon were void and inoperative. The Tribunal, therefore, set aside the assessments made on the assessee under s. 17(b) of the Act as being void and inoperative.

3. THE following questions have been referred to this Court under s. 27(1) of the WT Act, 1957 :

"(i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee's accountant, Shri T. P. Pal, was not an agent of the assessee for the purpose of accepting service of any process on the assessee and that accordingly there was no proper service of notice on the assessee ?

(ii) Whether, in any event, having regard to the fact that the assessee had filed returns in compliance with the notices under s. 17(b) of the WT Act served on the said accountant, the Tribunal was right in holding that the assessments made on the assessee on the basis of the said returns were void and inoperative